Global energy giant Shell is scheduled to make the first oil shipment from Libya since the imposition of an oil blockade by warlord Khalifa Haftar and his self-declared Libyan National Army (LNA) militia.
Haftar—the strongman of eastern Libya—announced the end of the blockade last week, enabling the Libyan National Oil Corporation to resume the production and export of crude. The blockade worsened the security quagmire in the country, and resulted in a nearly $10 billion loss for the Libyan economy, scarcity of liquidity, inflation of commodity prices and power cuts. The economic ramifications sparked massive protests calling for Haftar and the LNA to retract their blockade.
Oil production has soared as a direct result of the agreement between Haftar and Vice President of the Libyan Presidential Council Ahmed Maiteeq. The deal remains fragile and doesn’t resolve the substantive issue of the distribution of the oil income. Haftar has acceded to the tentative truce for one month before reassessing the situation.
With oil prices are already under pressure due to a surplus market, the return of Libyan oil to global markets raises fears of further economic contraction as prices continue to plummet. Given Libya’s already dire economic situation and reliance on oil exports, the prospects for a sustainable political solution without a sustainable oil price seem dim.
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